INSIGHTS
APR
1
WEEK AHEAD...
It took a while, over 5 years, but we finally broke through the all time high on the S&P this past week and there were no balloons, new hats or any of the nonsense that we have seen in the past.
It actually was met with a dull thud. This truly is one of the most unloved bull markets in history. Every economist, analyst and know it all has come up with 12 reasons why the market will correct and zero reasons why it will go higher. The prevailing thoughts were of government shutdowns and softer earnings. Despite a negative tone of those in the know, we witnessed record highs in all the major indexes.
We will take a bow for not caving in to the prevailing mood and seeing a better picture than most. We still believe that the market has some more room to the upside. Earnings season will be starting shortly and it’s pretty clear that the earning growth party may be over for the short term. However, corporations are still making money. Lots of it and they have not started to tap into that cash hoard yet so we know the possibility of a corporate fueled rally is still there. We do expect to see that part of the rally by the end of the summer. The announced corporate buybacks will increase. Mergers and acquisitions will increase and there will be expansion in some industries that have not seen major expansion in a while. Mainly in consumer durables.
For now, we see a flat lining in market movement with possible big swings on a daily basis due to micro news events. Overall, we still like the market at these levels and feel any correction is an opportunity to buy more.
This week has a few interesting data points: MFG Index, Factory orders, ADP Employment report and the Employment Situation. We expect all these to show a fairly robust economy and there won’t be any surprises.
We do think that the unemployment rate will rise to 7.8%. It won’t be disastrous but it will still show that even with better numbers on a weekly basis, unemployment is still a lot harder to fix than first thought.
This may actually be a positive since the Fed watches this very closely and their decisions about monetary easing and tightening are directly related to the strength or weakness of the Employment Situation.
It actually was met with a dull thud. This truly is one of the most unloved bull markets in history. Every economist, analyst and know it all has come up with 12 reasons why the market will correct and zero reasons why it will go higher. The prevailing thoughts were of government shutdowns and softer earnings. Despite a negative tone of those in the know, we witnessed record highs in all the major indexes.
We will take a bow for not caving in to the prevailing mood and seeing a better picture than most. We still believe that the market has some more room to the upside. Earnings season will be starting shortly and it’s pretty clear that the earning growth party may be over for the short term. However, corporations are still making money. Lots of it and they have not started to tap into that cash hoard yet so we know the possibility of a corporate fueled rally is still there. We do expect to see that part of the rally by the end of the summer. The announced corporate buybacks will increase. Mergers and acquisitions will increase and there will be expansion in some industries that have not seen major expansion in a while. Mainly in consumer durables.
For now, we see a flat lining in market movement with possible big swings on a daily basis due to micro news events. Overall, we still like the market at these levels and feel any correction is an opportunity to buy more.
This week has a few interesting data points: MFG Index, Factory orders, ADP Employment report and the Employment Situation. We expect all these to show a fairly robust economy and there won’t be any surprises.
We do think that the unemployment rate will rise to 7.8%. It won’t be disastrous but it will still show that even with better numbers on a weekly basis, unemployment is still a lot harder to fix than first thought.
This may actually be a positive since the Fed watches this very closely and their decisions about monetary easing and tightening are directly related to the strength or weakness of the Employment Situation.